Umbrella Vs LTD

[Theonenonly]

Currently I earn 27K per year.

Is it worth going LTD?

I am currently paying £28 per week for the services of my Umbrella but looking at the benifits (mainly less tax to pay) of going LTD paying for accounting services wouldnt be that much either so it may work out a couple of hundred pount better off per month.

I spoke to a few places that say anything over £25k go LTD but other places have said dont touch LTD till over £40k.

Is there anything I have to take into consideration? Ive heard about people hiring their wives as a secretary, what is the purpose/benifit of this?

Any advice would be helpful

Thanks

[filthy1980]

Currently I earn 27K per year.

Is it worth going LTD?

I am currently paying £28 per week for the services of my Umbrella but looking at the benifits (mainly less tax to pay) of going LTD paying for accounting services wouldnt be that much either so it may work out a couple of hundred pount better off per month.

I spoke to a few places that say anything over £25k go LTD but other places have said dont touch LTD till over £40k.

Is there anything I have to take into consideration? Ive heard about people hiring their wives as a secretary, what is the purpose/benifit of this?

Any advice would be helpful

Thanks

dude before you get torn a new one, retract the post and read around the forum stickies

[Theonenonly]

Ive read them and ive done the calculators and I technically will be better off but my question is more about personal experience.

Maybe someone who was once in the same boat as me has done this all before and would like to give me a "its not worth your time on that amount" or whatever.

As stated in the OP I have been given conflicting information.

And as for "getting ripped a new one" I think words typed on a message board wont affect my sleep too much k?

[Svalbaard]

I think it's best staying with your umbrella.

Primarily as you will realise all of your monthly earnings in full on a monthly basis.

An accountant will cost you much more on a month on month basis, plus end of year accounts prep will hit you for even more.

£27k per year is £2250 PM of which you would probabaly realise around £1700 PM after deductions with an umbrella. With a Ltd, I think you would be realising much less if you wanted to pay yourself the max possible, and still retain a small company profit margin.

Alternatively, with a Ltd you could pocket all the dosh and do a runner at year end.

[filthy1980]

Ive read them and ive done the calculators and I technically will be better off but my question is more about personal experience.

Maybe someone who was once in the same boat as me has done this all before and would like to give me a "its not worth your time on that amount" or whatever.

As stated in the OP I have been given conflicting information.

And as for "getting ripped a new one" I think words typed on a message board wont affect my sleep too much k?

stay with your brolly mate

[northernladuk]

dude before you get torn a new one, retract the post and read around the forum stickies

LOL! nice

[Theonenonly]

Thankd for the advice, lol I like the "do a runner" part but i couldnt do it i am paranoid by nature. hehe

See this is the info i wanted I didnt know about paying extra for year ends etc so this helps a lot.

I was happy with the umbrella before I got my first months wages and paid employers NI (which i didnt know about) that made my wage approx £200 lighter not much but it pays for my insurance and petrol!

So personal opinions what would you say the threshold was for going LTD? would it be around the £40k mark I have already been quoted?

Cheers

[filthy1980]

LOL! nice

saved you a few a couple mins of typing lol

[Svalbaard]

Well, now you are back into disputed territory. Ltd vs Umbrella is one of those debates that will burn eternally on the CUK boards, and I'm not sure there is a case "to go Ltd." just because you hit a certain earnings threshold; unless you are in the super-duper earnings bracket - with plenty of expenses to book.

I have my own opinions on running a Ltd and honestly can't see the benefits in terms of time, administration, accountancy and IR35 hassles, plus retention of profit for whatever legislation HMRC decide to hit you with because the wind has changed direction. But others have different opinions - and they also seem to do very well for themselves as their financial situations and needs are different from mine.

At the end of the day, if you are serious about the question, then you need to speak to a proper financial planner/accountant who understands the situation of the contractor. There are many on here who post from reputable companies and if you ask nicely I'm sure they will come out of their hiding places to help.

[Nixon Williams]

Currently I earn 27K per year.

Is it worth going LTD?

I am currently paying £28 per week for the services of my Umbrella but looking at the benifits (mainly less tax to pay) of going LTD paying for accounting services wouldnt be that much either so it may work out a couple of hundred pount better off per month.

I spoke to a few places that say anything over £25k go LTD but other places have said dont touch LTD till over £40k.

Is there anything I have to take into consideration? Ive heard about people hiring their wives as a secretary, what is the purpose/benifit of this?

Any advice would be helpful

Thanks

To answer this fully I would want to know further details, such as, what expenses do you incur, is £27K your gross rate etc.

However based on what you have said, yes you would be better off with a limited company, however you may take the view that the extra income was not worth it.

With your own company, not claiming any expenses, you could expect to retain 83.2% of your income with a company, even if caught by IR35 you could still retain 70.4% but this falls to 67.2% through an umbrella.

The above figures include accountancy fees.

Most accountants will charge a flat fee each month and would not normally charge extra for annual accounts. Whilst there are some that do this, in my experience most specialist accountants do not. Our fee of £75+VAT covers all the routine services and the annual accounts etc.

Alan